Road not taken: Global rule-making will face a serious problem if countries’ actions lead to loss of trust in a constructive dialogue process, says Biswajit Dhar of JNU.
‘India will have to quickly forge a grand alliance to protect interests and prevent mayhem’
They had converged in the Argentine capital earlier this month for the meeting of the World Trade Organisation’s (WTO) apex decision-making body called the Ministerial Conference (MC), an event attended by
trade officials from all the 164 WTO member countries.
On the cards was a decision, without many stringent riders, to enable developing countries to safeguard the livelihood of poor farmers and meet their population’s food security needs. This was considered ‘low-hanging fruit’ as there was already a Ministerial mandate to arrive at such a decision by 2017.
However, according to multiple sources, the Trump administration reneged at the last minute on an earlier commitment by the U.S., and instead sought many onerous conditions —
in proposed WTO norms relating to public stockholding of food grains — that developing countries could not accept as binding rules.
No token declaration
Also, sources said, the latest meeting ended without even the token
Ministerial Declaration mainly due to the Trump administration, leading 40-odd nations to question the centrality of ‘development’ (improving the trading prospects of the ‘developing nations’) in the multilateral trading system as envisaged in the ongoing Doha Round.
Rewind to the beginning of this year. In January, the Trump administration withdrew from the Trans-Pacific Partnership, a mega-regional free trade agreement signed by the Obama administration along with 11 other nations. With such startling moves, the Trump administration has given further credence to the notion that it favours bilateralism over multilateralism, and protectionism over free trade.
It has also signalled that it would not hesitate to take decisions that upset the continuity of or consistency with earlier U.S. policies.
In a much criticised stand,
the Trump administration decided to block the appointment of judges to the WTO’s Appellate Body, under the Dispute Settlement Mechanism (DSM) on grounds including that the U.S. was losing far too many cases — something that many have contested.This amounted to holding the DSM hostage and undermining the mechanism.
As a Presidential candidate, Donald Trump had even threatened to pull the U.S. out of the WTO, and later as President, has said that his country has “not been treated fairly by the WTO.”
The DSM, as per the WTO, is “recognised as a fundamental pillar of the organisation” and “enjoys wide support and confidence among the membership, which values it as a fair, effective and efficient mechanism to solve trade problems.”
Multilateral agreements within the WTO framework have far-reaching implications on global trade unlike bilateral deals. So when biennial WTO Ministerial Conferences (MC) end in a deadlock like what was seen in Buenos Aires, it affects the credibility of the multilateral rule-based trading system.
‘Sanctity of talks’
Jayant Dasgupta, former Permanent Representative of India to the WTO, referred to the failure in finding a permanent solution to the issue of public stockholding and said by not adhering to the commitments made by a previous (U.S) administration, the Trump administration was setting a dangerous precedent.
“This will mean there is no sanctity left in multilateral trade negotiations. Nothing will be binding any more,” he said.
Meanwhile, the Trump administration refused to see the talks as a failure. Soon after the Buenos Aires meet, U.S. Trade Representative Robert Lighthizer said in a tweet: “Congratulations to [WTO] Director General [Roberto Azevêdo] and [Argentine Minister and Chair of the Buenos Aires Ministerial Conference] Susana Malcorra on a successful MC.” In a statement, he said,
“The fact that one WTO Member with an extreme position chose to block a short Ministerial Declaration expressing shared views is no reflection on the excellent work of Minister Malcorra or her team.”
In a statement, India said though decisions on a permanent solution to food security and other agriculture issues were expected in the run up to the MC, “the strong position of one member against agricultural reform based on current WTO mandates and rules, led to a deadlock without any outcome on agriculture…”
It further said, “Due to …
a few members not supporting acknowledgment and reiteration of key underlying principles guiding the WTO and various agreed mandates, Ministers could not arrive at an agreed Ministerial Declaration. During the MC, India stood firm on its stand on the fundamental principles of the WTO, including multilateralism… the centrality of development… and special and differential treatment for all developing countries.”
However, according to Mr. Lighthizer, the Buenos Aires meeting “will be remembered as the moment when the impasse at the WTO was broken.” He said the U.S. will work with willing
Members on “e-commerce, scientific standards for agricultural products, and the challenges of unfair trade practices that distort world markets.” Mr. Lighthizer added, “The new direction of the WTO is set: improving trade through sectoral agreements by like-minded countries.”
Decisions at the WTO are taken by consensus among all member countries. Though all are considered equal, countries like the U.S. wield considerable influence in the manner in which consensus is arrived at.
So, when the U.S. decides that sectoral agreements at the WTO is the way forward, it could in turn change the very DNA of the global body and spell the end of WTO in its current form. Facing such a prospect, what are the options before India, which, along with several other nations, has been opposing the introduction of new and the so-called 21st Century trade issues such as e-commerce, investment facilitation and proposed norms on small firms, without resolving outstanding Doha Round issues such as food security?
Already, the Indian government is working on holding a meeting of important WTO members early next year. Pointing out that India’s positions have much in common with the African nations’ stand, Biswajit Dhar, professor, Jawaharlal Nehru University, said, “We have to build bridges with Africa.”
He said India needed to quickly forge a larger alliance on issues such as e-commerce and investment facilitation in addition to planning a strategy to counter the moves that are against India’s interests.
On a more fundamental point, Mr. Dhar warned that global rule-making will face a serious problem if countries take actions that lead to loss of trust in having a constructive dialogue process.
“If you kick the WTO out, you will be going back to the interwar years (1919-38) when there was total mayhem as there were no rules [to prevent barriers, protectionism and discriminatory trade],” he cautioned. Now, that would be a scenario similar to the one that is giving Ms. Jackson recurrent nightmares.
